Coronavirus disrupted everything. It has altered the way people work, communicate and get basic services. It has also killed businesses, leading to loss of thousands of jobs. However, not everyone lost. Some, in fact, are capitalizing on the new realities under the pandemic. Taxi hailing companies, delivery service providers, producers of sanitizers, mobile money operators and mobile retailers are among a few of the businesses that cater to the changing demands of customers. EBR’s Kiya Ali explores.
Since the World Health Organization (WHO) declared COVID-19 outbreak a pandemic in March 2020, businesses have been facing up to a crisis that may affect their operations for years to come. Demand for many manufactured items plummeted while the service sector came to a grinding halt all across the globe following lock downs and termination of domestic and international travel. In Ethiopia, a number of companies are at crossroads to either close down or shift operation to other lines of business following the harsh business conditions brought about by the pandemic.
“The service sector is now dead; it might probably take over a year to recover,” remarked Beniam Bisrat, Chairman of the Association of Hotel Owners. He, however, noted that this does not mean everyone should sit back and wait until the outbreak is over. “Every business has now reached at a point where it should start looking for opportunities amid the pandemic, which has killed most productive sectors. For instance, hotels have immediately started delivery service as mitigation mechanism to offset part of their losses,” he stated.
Although COVID-19 has created a gloomy atmosphere for many business owners, the decision made by hotels and restaurants to start delivery service has heralded a new lease of life for delivery business. Demand for transportation and delivery service workers appears to be strong. A case in point is the experience of Zay Ride, a company that is involved in taxi hailing and delivery business. While the pandemic has fundamentally been bad for most players involved in the service sector, it has brought the winds of opportunity for Zay Ride as its revenues from delivery business are mounting.
“Before the pandemic, the maximum delivery we used to make a day was just to 50 customers. But after the pandemic, we deliver goods to as high as 1,000 customers. With the demand going well above the reach of its regular employees, Zay Ride has hired additional 2,000 taxi and motorbike drivers. “The demand for delivery service has changed dramatically from almost non-existent to a highly sought out one,” Habtamu Tadesse, CEO of Zay Ride, told EBR.
While being part of the solution to prevent the spread of the virus by helping people stay at home and minimize their movement, delivery businesses are boosting their profit. “Problems always present opportunities. Instead of obsessing about the problem, coming up with innovative solutions would reduce the impact of the problem. While some businesses are struggling to survive and others are laying off employees, we are expanding our business and creating job opportunity for thousands of people. This will somehow reduce the adverse impact of the Pandemic on the labor market,” Habtamu remarked.
Deliver Addis also has a similar experience with Zay Ride. After the COVID-19 pandemic, the delivery service provider has expanded its business to include the delivery of essentials like groceries ranging from vegetables, bread, canned food and cleaning materials among others. “To help make our services accessible to more people and support our hospitality and retail partners, we have reduced our delivery price significantly and added further capacity to our fleet to make sure that we are able to provide service for as many people as possible,” said Feleg Tsegaye, CEO of Delivery Addis. Delivery Addis’ previous price was ETB70 for 0 to 3 kilometers, ETB85 for 3 to 6 kilometers and ETB100 for 6 to 9 kilometers; but now the price has gone down to ETB50, 70 and 90, correspondingly.
Moreover, the company has launched mobile payment options with banks, including: Commercial Bank of Ethiopia, Dashen Bank, Nib Bank and Zemen Bank. “We hope this will help reduce the amount of contact needed to perform deliveries and serve to help keep customers as well as drivers safer,” Feleg states.
Delivery Addis has also been using its own restaurants to serve additional lower-cost meals to help staff out during these hard times. “It’s difficult to consider a pandemic an opportunity. However, it has pushed us to find new ways to help our partners and provide additional services to individual customers. While we expect the business to grow, our primary focus, is addressing the needs of as many people as possible. We’re hoping that through our efforts, small businesses will be able to stay afloat and remain open during these trying moments,” Feleg added.
Another business that is benefiting from the new realities of the pandemic is the production of sanitizers. Hand sanitizers, which were previously considered a luxury and used only by a few people, have been given a new lease of life by the Coronavirus outbreak. To halt the spread of Coronavirus and address the growing demand for the items, the Ministry of Trade and Industry announced, around 40 firms have begun to produce hand sanitizers and medical face masks. These firms produced and distributed more than 200,000 litters of hand sanitizers by the end of March, 2020.
The government has temporarily lifted the 60Pct excise tax that was imposed on alcohol, the major input in the production of sanitizers, to promote the production of hand sanitizers. The government has distributed over 2.5 million liters of alcohol collected from sugar factories to hand sanitizer producers. The move has motivated companies that were producing detergents and pharmaceutical products to shift their manufacturing line into hand sanitizer production.
Yero Small Industry, a company that was producing soaps, is one of those companies. Yero Small Industry was established by five individuals nine months ago with a startup capital of ETB60,000 as a Small and Medium Enterprise (SME). Before the advent of the pandemic, the company produced soaps and strived to expand its business by attracting more clients. Little did the company know that an unprecedented surge in the demand for hygienic products like soap and hand sanitizer was just around the corner. The demand for these products shot up so high that the combined production capacity of all manufacturers dwarfed before it. Albeit the reinvigorated production, there was still shortage in the market. “When we observed the growing demand for hand sanitizers set off by COVID-19 fears, we immediately shifted our line of production from soap to hand sanitizers,” said Frezewd Alemu, production manager of the company.
Aiming to capitalize on the business opportunity, Yero Small Industry increased its production capacity by injecting additional capital. “During these trying times, manufacturing hand sanitizers and other detergents has a dual benefit. On the one hand, it helps society prevent itself from the Coronavirus. On the other hand, by increasing our sales, we will develop our potential to create more job opportunities for the youth in the near future,” Frezewd explained. Currently, the total capital of Yero Small Industry has reached ETB1.5 million.
Olinga Soap Manufacturing Enterprise is also among the companies that saw an uptick in demand for hand sanitizers. The company, which has 37 employees, was able to get three folds of its previous monthly profit within a week. “The company was able to generate one million birr per month. Following the Coronavirus outbreak, however, it was able to make as high as four million birr per week,” remarked Demeke Mamo, the company’s Marketing Expert.
However, the company’s benefit was short-lived. Demeke pointed out that Olinga Soap Manufacturing Enterprise was forced to temporarily halt its production. “Initially, government directives stipulated hand sanitizer manufacturing firms produce sanitizers with a minimum alcohol content of 60Pct. After we produced and distributed the products into the market based on the governmental guideline, we were told that the alcohol should be increased. As our products were already in the market, we were then accused of producing counterfeit products,” complained Demeke. Corruption and involvement of different governmental bodies in the process are among the challenges raised by Demeke. “It is not clear which organization is the right one to speak to,” he added.
Shortage of packaging materials is another challenge faced by producers of such items. Despite the challenges, however, Yero has pushed forth with efforts to capitalize on the business opportunity by working towards the production of disinfectants. “We are discussing with the government to import the equipment from India,” Frezewd said.
Yet another flourishing business in the midst of the pandemic is the mobile market. As people isolate themselves and students begin to follow their lessons from their homes, most communication is taking place via the internet. This has increased the demand for smart phones. For instance, the price of Samsung A10 increased from ETB5,500 to ETB8,500 within a few months. “The demand for mobile phones has risen by about 70Pct after the first case of Coronavirus was reported in Ethiopia,” a Tecno mobile shop sales person told EBR.
Telehealth, which was struggling to get wide acceptance, has also been flourishing since the advent of the pandemic in Ethiopia. Dawit Wondimagegn (MD), Chief Executive Director of the College of Health Sciences and Tikur Anbessa Hospital of the Addis Ababa University, stated that the absence of database and an ICT system that integrates doctors, laboratory service providers and pharmacies were hindering the growth of Telehealth. The timely need to apply physical distancing and minimize chances of exposure to the virus have made it imperative for Tikur Anbessa Hospital to provide Telemedicine service. “Currently, we are serving close to 80Pct of our clients using Telehealth service,” Dr. Dawit noted.
In general, although a number of businesses are hugely affected by the Coronavirus pandemic, a handful have been presented with an opportunity to blossom. “A business person should always scan the environment and come up with a solution for a problem that is affecting the society. By so doing, they will satisfy the demand while raising their profits,” remarked Mekonen Hailu, Communications Head of the Ethiopian Investment Commission. EBR
9th Year • July 1 – July 15 2020 • No. 88